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Day: April 6, 2009

Hey ya’ll! Just checking in real quick to say hello. I see the gents are taking good care of the blog, as only a few barstools are laying on the floor, and a few unwashed glasses and empty bottles are scattered on the tables. Ok – who’s in charge of clean up?

Jo Egelhoff asks the question as it relates to school districts over at Fox Politics (no, it’s not related to Fox News; Jo lives in the Fox River valley in northeast Wisconsin), and she doesn’t like the answers. While she focuses specifically on Wisconsin, there are lessons for the rest of the country.

The stimulus act focuses most of the money on expansion of programs with money that will cease to exist in 2 years. Wisconsin Rapids Public Schools Superindendent Bob Crist said, “It’s great news, but it’s only for one or two years. You can’t put a huge program in place and then not be able to substantiate that in two years, so you have to be somewhat cautious on how you spend the funds.”

Wisconsin State Senator Mike Ellis (R-Neenah) issued a warning that is based on the state’s experience with creating unfunded future mandates: “Don’t use these funds to enhance or create ongoing programs that will need continued funding after the federal funds go away. To the extent that they can, school boards should use these one-time resources to build up rainy-day funds and to pay for other one-time needs. Otherwise, if they follow the state’s lead, we could have 426 local structural deficits all across Wisconsin.”

Sounds like a crazy headline, doesn’t it? Something written by a black helicopter-fearing loony from his underground bunker somewhere in the mountains? Yet that’s exactly what author David Leonhardt did last week when writing about President Obama’s trip to the economic summit: Stimulus Thinking, and Nuance

In the summer of 1933, just as they will do on Thursday, heads of government and their finance ministers met in London to talk about a global economic crisis. They accomplished little and went home to battle the crisis in their own ways.

More than any other country, Germany — Nazi Germany — then set out on a serious stimulus program. The government built up the military, expanded the autobahn, put up stadiums for the 1936 Berlin Olympics and built monuments to the Nazi Party across Munich and Berlin.

The economic benefits of this vast works program never flowed to most workers, because fascism doesn’t look kindly on collective bargaining. But Germany did escape the Great Depression faster than other countries. Corporate profits boomed, and unemployment sank (and not because of slave labor, which didn’t become widespread until later). Harold James, an economic historian, says that the young liberal economists studying under John Maynard Keynes in the 1930s began to debate whether Hitler had solved unemployment.

No sane person enjoys mixing nuance and Nazis, but this bit of economic history has a particular importance this week. In the run-up to the G-20 meeting, European leaders have resisted calls for more government spending. Last week, the European Union president, Mirek Topolanek, echoed a line from AC/DC — whom he had just heard in concert — and described the Obama administration’s stimulus plan as “a road to hell.”

Here in the United States, many people are understandably wondering whether the $800 billion stimulus program will make much of a difference. They want to know: Does stimulus work? Fortunately, this is one economic question that’s been answered pretty clearly in the last century.

Yes, stimulus works.

Power Line and Contentions both ably dismantle Leonhardt’s arguments; I’ll just point out the irony in a left-liberal writer pleading “nuance” when looking to Nazi Germany for inspiration, when his colleagues on the Left had spent years denouncing the Bush Administration’s national security measures in the wake of 9/11 as naked Hitlerism. I guess nuance is okay when Democrats are in power.

Getting back to the Leonhardt’s article, his thesis is that, in those cases where stimulus didn’t seem to work, it’s because government didn’t stimulate enough. More massive spending and more government intervention in the economy is the solution. This intervention leads almost inevitably to control, as government becomes the dominant player in public-private “partnerships.” He who pays the piper calls the tune. Jonah Goldberg explained it thusly in his Liberal Fascism:

The fascist bargain goes something like this. The state says to the industrialist, “You may stay in business and own your factories. In the spirit of cooperation and unity, we will even guarantee you profits and a lack of serious competition. In exchange, we expect you to agree with—and help implement—our political agenda.” The moral and economic content of the agenda depends on the nature of the regime.

We’re already seeing this in the efforts of the administration to control compensation and even executive personnel decisions at companies that receive federal money, all to serve the administration’s agenda. Firing the CEO of GM, demanding the power to seize non-banking financial firms at the Treasury Secretary’s discretion, refusing to accept repayment of TARP funds because that would diminish government’s control … with each new measure, the government leviathan seems to want more.

Call it “a managed market,” “corporatism,” “fascism,” or plain old “statism,” Leonhardt’s recommendation, one that Team Obama seems to agree with, is a recipe for a vastly enlarged federal government and a concurrent loss of personal freedom. Just take a look at where it’s been implemented in the past.

Adnkronos International reports that a Syrian man disguised as an Al-Jazeera reporter plotted to assassinate President Obama during his official visit to Turkey:

As United States president Barack Obama began an official visit to Turkey on Monday, reports surfaced that a Syrian man was arrested in Istanbul in connection with a plot to kill him. The man – who sought to disguise himself as a journalist for the Arab TV network Al-Jazeera – managed to obtain press accreditation and allegedly planned to stab the US president with a knife, said Saudi daily al-Watan.

As an American; I am just glad to see that the plot was exposed, because the LAST THING this Country needs is our President hurt or killed. I may not agree with Obama’s Politics, but I do not want to see the guy murdered. Anyone that would say anything any different is either crazy or just an mean spirited <expletive deleted>. It is one thing to chide the President because of his politics, but it’s an entire other matter to do something like this.

Revisions/extensions (1:37 pm 4/7/2009) –The AP reports (H/T – Ed Morrissey) that it was a hoax involving a “mentally-disturbed” man. Oddly, the details track quite nicely with the leftist meme that popped up when the original reports came out.

Ed, however, is puzzled why the Turks would quickly release a mentally-disturbed individual connected to an assassination plot. I seem to recall John Hinckley being declared insane.

Back at my regular home, both my co-blogger Shoebox and I have been monitoring attempts, some successful, others not, by banks to get out from under the Troubled Assets Relief Program. In today’s Wall Street Journal, Stuart Varney relates the story of a larger bank that was forced to take TARP money:

Here’s a true story first reported by my Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons. It wanted to recapitalize the banks to halt a financial panic.

Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He’s been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with “adverse” consequences if its chairman persists. That’s politics talking, not economics.

Why can’t this bank do what some tiny banks that received TARP money have done? Varney answer that with three words – “Control. Direct. Command.” He points to the Pay for Performance Act, which many have seen as merely a ceiling on pay at any company that has so much as a dime of TARP money. Given the Democrats’ support for a “living wage”, I see that as a vehicle for raising the minimum wage by means other than legislation. After all, if the biggest banks are forced to pay a large sum of money for entry-level tellers, that will force the smaller banks and other businesses that offer entry-level jobs to follow suit.